Veeco Reports Fourth Quarter and Fiscal Year 2018 Financial Results

Wall Street Business News

Fourth Quarter 2018 Highlights:

  • Revenues of $99.0 million, compared with $139.7 million in the same period last year
  • GAAP net loss of $144.7 million, or $3.11 loss per diluted share
  • Non-GAAP net loss of $7.5 million, or $0.16 loss per diluted share

PLAINVIEW, N.Y., Feb. 11, 2019 (GLOBE NEWSWIRE) — Veeco Instruments Inc. (Nasdaq: VECO) today announced financial results for its fourth quarter and fiscal year ended December 31, 2018. Results are reported in accordance with U.S. generally accepted accounting principles (“GAAP”) and are also reported adjusting for certain items (“Non-GAAP”). A reconciliation between GAAP and Non-GAAP operating results is provided at the end of this press release. 

 
U.S. Dollars in millions, except per share data
 
    4th Quarter   Full Year
GAAP Results   Q4 ’18   Q4 ’17   2018     2017  
Revenue   $ 99.0     $ 139.7     $ 542.1     $ 475.7  
Net income (loss)   $ (144.7 )   $ (8.5 )   $ (407.1 )   $ (51.4 )
Diluted earnings (loss) per share   $ (3.11 )   $ (0.18 )   $ (8.63 )   $ (1.16 )

                         
    4th Quarter   Full Year
Non-GAAP Results   Q4 ’18   Q4 ’17   2018   2017
Net income (loss)   $ (7.5 )   $ 6.0   $ 14.2   $ 16.8
Operating income (loss)   $ (6.9 )   $ 7.3   $ 23.2   $ 23.2
Diluted earnings (loss) per share   $ (0.16 )   $ 0.13   $ 0.30   $ 0.38
                           

Based on a reduction in Veeco’s stock price during the fourth quarter, the Company recorded a goodwill impairment charge of $123 million for GAAP results.  This is a non-cash charge and does not affect liquidity, day to day operations or Non-GAAP results of the company. 

“Commoditization of the MOCVD market for LEDs in China has reduced our revenue significantly, and is reflected in our fourth quarter results,” commented William J. Miller, Ph.D., Chief Executive Officer.  “However, we are excited about our future as we see order activity in leading edge, Front-End Semiconductor and exciting growth opportunities in Compound Semiconductor and Advanced Packaging.”

Guidance and Outlook

The following guidance is provided for Veeco’s first quarter 2019:

  • Revenue is expected in the range of $85 million to $105 million
  • Non-GAAP operating income (loss) is expected in the range of ($12) million to ($3) million
  • GAAP earnings (loss) per share are expected in the range of ($0.59) to ($0.39)
  • Non-GAAP earnings (loss) per share are expected in the range of ($0.30) to ($0.10)

Please refer to the tables at the end of this press release for further details.

Conference Call Information

A conference call reviewing these results has been scheduled for today, February 11, 2019 starting at 5:00pm ET. To join the call, dial 1-800-239-9838 (toll free) or 1-929-477-0448 and use passcode 8815152. Participants may also access a live webcast of the call by visiting the investor relations section of Veeco’s website at ir.veeco.com. A replay of the webcast will be made available on the Veeco website beginning at 8:00pm ET this evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.

New Accounting Standard

The Company adopted the new accounting standard, ASC 606, related to revenue recognition, effective January 1, 2018. The prior periods presented here have been recast to reflect the adoption of this new standard.

About Veeco

Veeco (NASDAQ: VECO) is a leading manufacturer of innovative semiconductor process equipment. Our proven MOCVD, lithography, laser annealing, ion beam and single wafer etch & clean technologies play an integral role in producing LEDs for solid-state lighting and displays, and in the fabrication of advanced semiconductor devices. With equipment designed to maximize performance, yield and cost of ownership, Veeco holds technology leadership positions in all these served markets. To learn more about Veeco’s innovative equipment and services, visit www.veeco.com.

Forward-looking Statements

To the extent that this news release discusses expectations or otherwise makes statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These factors include the risks discussed in the Business Description and Management’s Discussion and Analysis sections of Veeco’s Annual Report on Form 10-K for the year ended December 31, 2017 and in our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and press releases. Veeco does not undertake any obligation to update any forward-looking statements to reflect future events or circumstances after the date of such statements.

financial tables attached-

Veeco Contacts:

Investors:
Anthony Bencivenga 516-677-0200 x1272
abencivenga@veeco.com 

Media:
David Pinto 408-325-6157
dpinto@veeco.com            

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)
(unaudited)

                           
    Three months ended December 31,   Year ended December 31,  
    2018     2017     2018     2017    
Net sales   $ 98,972     $ 139,661     $ 542,082     $ 475,686    
Cost of sales     63,713       84,309       348,363       299,458    
Gross profit     35,259       55,352       193,719       176,228    
Operating expenses, net:                          
Research and development     24,962       24,318       97,755       81,987    
Selling, general, and administrative     21,218       28,675       92,060       100,250    
Amortization of intangible assets     4,249       13,753       32,351       35,475    
Restructuring     887       2,246       8,556       11,851    
Acquisition costs     53       1,510       2,959       17,786    
Asset impairment     122,829             375,172       1,139    
Other, net     42       (165 )     368       (392 )  
Total operating expenses, net     174,240       70,337       609,221       248,096    
Operating income (loss)     (138,981 )     (14,985 )     (415,502 )     (71,868 )  
Interest expense, net     (4,485 )     (4,753 )     (18,332 )     (17,122 )  
Income (loss) before income taxes     (143,466 )     (19,738 )     (433,834 )     (88,990 )  
Income tax expense (benefit)     1,208       (11,259 )     (26,746 )     (37,594 )  
Net income (loss)   $ (144,674 )   $ (8,479 )   $ (407,088 )   $ (51,396 )  
                           
Income (loss) per common share:                          
Basic   $ (3.11 )   $ (0.18 )   $ (8.63 )   $ (1.16 )  
Diluted   $ (3.11 )   $ (0.18 )   $ (8.63 )   $ (1.16 )  
                           
Weighted average number of shares:                          
Basic     46,551       47,037       47,151       44,174    
Diluted     46,551       47,037       47,151       44,174    
                                   
                                   

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

(in thousands)

             
    December 31,   December 31,
    2018   2017
Assets            
Current assets:            
Cash and cash equivalents   $ 212,273   $ 279,736
Restricted cash     809     847
Short-term investments     48,189     47,780
Accounts receivable, net     66,808     98,866
Contract assets     10,397     160
Inventories     156,311     120,266
Deferred cost of sales     3,072     15,994
Prepaid expenses and other current assets     22,221     33,437
Total current assets     520,080     597,086
Property, plant and equipment, net     80,284     85,058
Intangible assets, net     85,149     369,843
Goodwill     184,302     307,131
Deferred income taxes     1,869     3,047
Other assets     29,132     25,310
Total assets   $ 900,816   $ 1,387,475
             
Liabilities and stockholders’ equity            
Current liabilities:            
Accounts payable   $ 39,611   $ 50,318
Accrued expenses and other current liabilities     46,450     58,068
Customer deposits and deferred revenue     72,736     112,032
Income taxes payable     1,256     3,846
Total current liabilities     160,053     224,264
Deferred income taxes     5,690     36,845
Long-term debt     287,392     275,630
Other liabilities     9,906     10,643
Total liabilities     463,041     547,382
             
Total stockholders’ equity     437,775     840,093
             
Total liabilities and stockholders’ equity   $ 900,816   $ 1,387,475
             
             

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data

(in thousands, except per share amounts)
(unaudited)

                         
          Non-GAAP Adjustments      
                         
          Share-Based              
Three months ended December 31, 2018   GAAP   Compensation   Amortization   Other   Non-GAAP
Net sales   $ 98,972                 $ 98,972  
Gross profit     35,259     282         134       35,675  
Gross margin     35.6 %                 36.0 %
Research and development     24,962     (883 )             24,079  
Selling, general, and administrative and Other, net     21,260     (2,024 )       (723 )     18,513  
Net income (loss)     (144,674 )   3,353     4,249   129,532       (7,540 )
                         
Income (loss) per common share:                        
Basic   $ (3.11 )               $ (0.16 )
Diluted     (3.11 )                 (0.16 )
Weighted average number of shares:                        
Basic     46,551                   46,551  
Diluted     46,551                   46,551  
                             
                             

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

     
Three months ended December 31, 2018    
Restructuring   722
Acquisition related   53
Release of inventory fair value step-up associated with the Ultratech purchase accounting   70
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   190
Accelerated depreciation   597
Asset impairment   122,829
Non-cash interest expense   3,023
Non-GAAP tax adjustment *   2,048
Total Other   129,532
___________________________
*  – The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments.
   
     

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, incremental transaction-related compensation, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)

                           
          Non-GAAP Adjustments        
                           
          Share-based              
Three months ended December 31, 2017     GAAP   Compensation   Amortization   Other   Non-GAAP  
Net sales   $ 139,661                 $ 139,661  
Gross profit     55,352     607         537       56,496  
Gross margin     39.6 %                 40.5 %
Research and development     24,318     (971 )             23,347  
Selling, general, and administrative and Other, net     28,510     (2,668 )       (196 )     25,646  
Net income (loss)     (8,479 )   4,220     13,753   (3,460 )     6,034  
                           
Income (loss) per common share:                          
Basic   $ (0.18 )               $ 0.13  
Diluted     (0.18 )                 0.13  
Weighted average number of shares:                          
Basic     47,037                   47,109  
Diluted     47,037                   47,208  
                             

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

     
Three months ended December 31, 2017    
Restructuring   2,073  
Acquisition related   1,510  
Release of inventory fair value step-up associated with the Ultratech purchase accounting   440  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   293  
Non-cash interest expense   2,805  
Non-GAAP tax adjustment *   (10,581 )
Total Other   (3,460 )
___________________________
*  – The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments, as well as the exclusion of certain tax benefits attributed to the change in U.S. tax laws.
       

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, incremental transaction-related compensation, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (loss)
(in thousands)
(unaudited)

             
    Three months ended   Three months ended
    December 31, 2018   December 31, 2017
GAAP Net income (loss)   $ (144,674 )   $ (8,479 )
Share-based compensation     3,353       4,220  
Amortization     4,249       13,753  
Restructuring     722       2,073  
Acquisition related     53       1,510  
Release of inventory fair value step-up associated with the Ultratech purchase accounting     70       440  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting     190       293  
Accelerated depreciation     597        
Asset impairment     122,829        
Interest (income) expense     4,485       4,753  
Income tax expense (benefit)     1,208       (11,259 )
Non-GAAP Operating income (loss)   $ (6,918 )   $ 7,304  
                 

This table includes financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, incremental transaction-related compensation, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)

                           
          Non-GAAP Adjustments        
                           
          Share-based              
For the year ended December 31, 2018     GAAP   Compensation   Amortization   Other   Non-GAAP  
Net sales   $ 542,082                 $ 542,082  
Gross profit     193,719     1,885         2,849       198,453  
Gross margin     35.7 %                 36.6 %
Research and development     97,755     (3,611 )             94,144  
Selling, general, and administrative and Other     92,428     (9,417 )       (1,863 )     81,148  
Net income (loss)     (407,088 )   16,074     32,351   372,862       14,199  
                           
Income (loss) per common share:                          
Basic   $ (8.63 )               $ 0.30  
Diluted     (8.63 )                 0.30  
Weighted average number of shares:                          
Basic     47,151                   47,171  
Diluted     47,151                   47,199  
                             

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

     
For the year ended December 31, 2018    
Restructuring   7,395  
Acquisition related   2,959  
Release of inventory fair value step-up associated with the Ultratech purchase accounting   2,516  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   1,011  
Accelerated depreciation   1,184  
Asset impairment   375,172  
Non-cash interest expense   11,762  
Non-GAAP tax adjustment *   (29,137 )
Total Other   372,862  
___________________________
*  – The ‘with or without’ method is utilized to determine the income tax effect of all non-GAAP adjustments.
     
       

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and incremental transaction-related compensation.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)

                           
          Non-GAAP Adjustments        
                           
          Share-based              
For the year ended December 31, 2017     GAAP   Compensation   Amortization   Other   Non-GAAP  
Net sales   $ 475,686                 $ 475,686  
Gross profit     176,228     2,505         10,075       188,808  
Gross margin     37.0 %                 39.7 %
Research and development     81,987     (2,957 )             79,030  
Selling, general, and administrative and Other     99,858     (12,851 )       (466 )     86,541  
Net income (loss)     (51,396 )   24,396     35,475   8,368       16,843  
                           
Income (loss) per common share:                          
Basic   $ (1.16 )               $ 0.38  
Diluted     (1.16 )                 0.38  
Weighted average number of shares:                          
Basic     44,174                   44,247  
Diluted     44,174                   44,486  
                           

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

     
For the year ended December 31, 2017    
Restructuring    9,971  
Acquisition related    13,583  
Release of inventory fair value step-up associated with the Ultratech purchase accounting    9,664  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting    695  
Accelerated depreciation    180  
Asset impairment    1,139  
Non-cash interest expense    10,446  
Non-GAAP tax adjustment *    (37,310 )
Total Other    8,368  
__________________________
*  The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments, as well as the exclusion of certain tax benefits attributed to the change in U.S. tax laws and the release of FIN48 reserves.
     
       

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and incremental transaction-related compensation.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (loss)
(in thousands)
(unaudited)

             
    Year ended   Year ended
    December 31, 2018   December 31, 2017
GAAP Net income (loss)   $ (407,088 )   $ (51,396 )
Share-based compensation     16,074       24,396  
Amortization     32,351       35,475  
Restructuring     7,395       9,971  
Acquisition related     2,959       13,583  
Release of inventory fair value step-up associated with the Ultratech purchase accounting     2,516       9,664  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting     1,011       695  
Accelerated depreciation     1,184       180  
Asset impairment     375,172       1,139  
Interest (income) expense     18,332       17,122  
Income tax expense (benefit)     (26,746 )     (37,594 )
Non-GAAP Operating income (loss)   $ 23,160     $ 23,235  
                 

This table includes financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and incremental transaction-related compensation.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in millions, except per share amounts)
(unaudited)

                                             
                    Non-GAAP Adjustments                
                                             
                    Share-based                        
Guidance for the three months ending March 31, 2019   GAAP   Compensation   Amortization    Other    Non-GAAP
Net sales   $ 85       $ 105                 $ 85       $ 105  
                                             
Gross profit     28         37     1         29         38  
Gross margin     33 %       35 %                 34 %       36 %
                                             
Net income (loss)   $ (28 )     $ (19 )   4   4   6   $ (14 )     $ (5 )
                                             
Income (loss) per diluted common share   $ (0.59 )     $ (0.39 )               $ (0.30 )     $ (0.10 )
Weighted average number of shares     47           47                   47           47  
                                                     

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (Loss)
(in millions)
(unaudited)

                 
Guidance for the three months ending March 31, 2019                
GAAP Net income (loss)   $ (28 )     $ (19 )
Share-based compensation     4         4  
Amortization     4         4  
Restructuring     2         2  
Interest expense, net     4         4  
Income tax expense (benefit)     1         1  
Other     1         1  
Non-GAAP Operating income (loss)   $ (12 )     $ (3 )

Note: Amounts may not calculate precisely due to rounding.

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, incremental transaction-related compensation, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

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